For a long time, multinational companies around the world took the decision to outsource their global payroll system. There was a belief that shifting responsibility for global payroll to a third-party provider would free up resources and time, enabling the business to focus and dedicate resources to go to market strategies and overall company profitability.
While there have been advantages to using the outsourcing model, there have also been problems and a surrendering of visibility and control over how and where their employees are paid is proving to be less than satisfactory form of workforce management for many multinationals.
Global payroll today has become a complex multi-vendor environment filled with data security, functionality and compliance challenges. This has resulted in a shift in thinking and culture with more and more companies interested in learning about how to achieve greater control over their global payroll function and human resources information system. These companies also recognize the connected relationship between human resource management and payroll, and they are now giving a lot of thought to the best way to integrate these functions and establish a firm connection between these two crucial departments going forward.
In this article, we will examine the relationship between HR and payroll as well as highlight ways in which an integrated solution that connects these two functions can bring up range of benefits to an organization.
Technology innovations make it possible and sensible
In the past, payroll processing may have been viewed as a specialist area where specific technology developed by third party providers was the best way to deliver payroll services. Today, things have changed - thanks to innovative digital tools and cloud environments, both global payroll and human resources technology has advanced hugely.
Next generation technology such as artificial intelligence, machine learning and automated processes now means that there is scope to introduce an integrated technology solution for both HR and global payroll that can either be delivered in-house or at the very least, centrally managed by a global payroll or HR Department.
Instead of searching the market for outsourcing specialists, multinational companies are now looking at investing in a digital management system to ensure the internal technology infrastructure within their organization is one fully capable of delivering both HR and global payroll services in a smart , fast and efficient manner.
These two departments are interconnected, there is a requirement on each to share data with the other, therefore an integrated technology solution that connects HR software and payroll software for smooth data transfers and consolidated reporting makes sense. There is a clear business case for financial investment in a payroll integration with HR technology that can streamline workflows in payroll processes.
Less manual effort, more efficiency
The human resources and global payroll functions are both characterized by excessive and unnecessary date entry and manual workload volumes. In the age of technology and innovative digital tools, it seems a poor use of time and effort to continue with manual administration and a reliance on email and spreadsheets.
An integrated HR and global payroll solution is a better approach, and it should be prioritized at all multinationals. HCM system inputs and payroll calculations and validations can be done via automation technology or machine learning- and this digital innovation can be deployed as part of an integrated HR and global payroll technology platform solution.
Accuracy improves immediately as the risk of human error is greatly reduced in the process, and anything that improves accuracy has the knock-on effect of also tightening compliance control. Some much-needed time and breathing space is introduced to the monthly payroll cycle and the skills of both HR professionals and global payroll professionals can be pointed in the direction of higher priority tasks such as reporting and analysis.
Better connected systems
An integrated HR and global payroll solution ensure that business functions who need to share data with each other are able to do so in a streamlined and effective way. HR data and global payroll data needs to be able to move seamlessly between these two departments- it is crucial for the calculation and processing of global payroll and it also delivers intelligent business insight when extracted successfully for reporting purposes.
Better connected systems improve the delivery of day to day services while also ensuring that comprehensive reporting is easier to schedule, extract and analyze. This is an example of how an integrated solution connecting to critical business services ends up benefiting the wider organization as a whole.
Integrated HR and global payroll functions are also far more likely to be in a position to connect to the wider technology ecosystem including other related departments such as Compliance, Finance, Tax and Procurement. The more innovative, agile and flexible a technology platform is, the smoother the connections to other platforms are.
Better Reporting
HR and Global payroll departments contain a lot of crucial and insightful data that can tell a lot about the financial health of an organization. A company's employees are usually considered to be their most important asset and global payroll is generally recognized as their largest expense.
It makes sense therefore, to have a level of detailed and comprehensive reporting that delivers real time, accurate information and data on these two crucial metrics. If both HR and global payroll systems are integrated and connected via a technology platform, then extracting crucial reporting containing data from both departments will be easier.
C-Suite executives and leadership teams will always be interested in reporting and data that can help them assess performance and costs. Advanced technology and digital tools immediately improve global payroll reporting, and an integrated solution facilitates the flow of data between these two departments so that comprehensive reporting is capable of giving an insightful picture of both.
It is much easier to create and generate comprehensive reporting from a single platform than it is from multiple different sources. The database of two connected business functions will allow for richer, more detailed and customized reporting options.
Leadership teams want to know about labor costs in specific countries and regions as well as analysis on country comparisons. They also want information on talent management so they can make decisions on where best to deploy resources globally. An integrated HR and global payroll platform can ensure that accurate reporting and real-time analytics are readily available at the click of a button to support critical business decisions.
Stronger compliance
When a multinational operates with multiple payroll vendors scattered around the world, it can be very difficult to prove that you are compliant in a specific country. Overall responsibility for compliance always lies with the global employer and therefore they can always benefit from technology that brings information from multiple sources together on to a single platform.
Penalties and sanctions for non-compliance are on the rise and the severity of these penalties varies from country to country. Local country governments are not interested in the complexity of global payroll and HR administration. Multinationals are expected and obligated to meet all compliance requirements in all countries in which they do business.
If your HR and global payroll processes are integrated and connected, this immediately strengthens the accuracy of the data moving between the systems. Accurate data is essential to maintaining compliance.
Connected systems often operate with standardized practices and processes - compliance is far more likely to be achieved smoothly if employees and professionals in different countries are operating within standard process frameworks.
Cloud deployed integrated payroll solutions often have built in data security measures that makes the sharing of sensitive HR and global payroll data far more secure than email and spreadsheets. Any process that makes data more secure subsequently makes it more compliant.
Information Control
Many global payroll managers state that a lack of control and visibility over their payroll process is an ongoing issue. An integration between HR and global payroll systems would be welcomed by professionals and managers in both departments as it would inevitably improve control and visibility when it comes to data and information.
Global payroll data often contains sensitive and personally identifiable information so anything that helps tighten the controls and secure this data is to be welcomed. Integrated solutions are designed to connect and share data in a secure, yet seamless fashion.
When integrated, it is much easier to cross reference and reconcile human resources information from HCM systems with corresponding global payroll system data. It is easier to arrive at a single source of truth and easier for HR professionals and HR managers to feel confident that the information is accurate and secure. It is also quite likely that if information needs to be changed, a single click update in one system will also update it in another if both systems are aligned and integrated.